A San Diego man has pleaded guilty to fraudulently obtaining nearly $3 million in federal funds that were meant to help small businesses during the pandemic.
San Diego resident Thomas Zolezzi, 61, admitted in federal court that he submitted five falsified loan applications to obtain relief funds. He used the fraudulent money to pay for personal expenses, according to court records.
Early in the pandemic, the government launched the Coronavirus Aid Relief, and Economic Security Act, or CARES Act, to provide more than $2 trillion to help workers, families and businesses through the economic fallout of the public health crisis. The CARES Act authorized the U.S. Small Business Administration, or SBA, to temporarily facilitate emergency relief, such as new loans, through local banks.
Part of that effort was the Paycheck Protection Program, commonly referred to as PPP, which deployed federally backed loans to help businesses keep their workers employed and to cover expenses during the pandemic. Across two funding rounds, the government authorized more than $600 billion in forgivable loans to small businesses.
The government also launched the Economic Injury Disaster Loans program to help businesses cover payroll expenses, sick leave, production costs, debt, rent and mortgage costs. For these loan programs, the borrower agreed to use the money on eligible expenses and in some cases, they could apply for forgiveness.
While these loans helped many struggling businesses, the programs were also rife with fraud so in 2021 the government launched the COVID-19 Fraud Enforcement Task Force to investigate these instances.
In Zolezzi’s case, he admitted to lying about payroll expenses, inflated the number of people he employed, falsified revenue figures and misrepresented how he’d use the money. The scheme allowed him to fraudulently obtain three PPP loans and two loans from the Economic Injury Disaster program..
For example, in 2021 Zolezzi received a little more than $1 million for a PPP loan from Capital Plus Financial. His application claimed his business, Casamar USA, had 65 employees with an average monthly payroll of about $460,000. The court documents state that the amount of employees and payroll costs were both false.
As part of his plea agreement reached on Nov. 16, Zolezzi agreed to pay restitution of more than $700,000 to the SBA and roughly $2.2 million to Capital Plus Financial, the lender he duped.
Zolezzi was charged with wire fraud, which carries a maximum penalty of 20 years in prison and up to a $1 million fine. Sentencing is scheduled for Feb. 5.
